“Considering the continuing shift from DB to DC, a horizontal approach aligning DB and DC parts of the stress test is warranted in order to make the future IORP stress tests more relevant,” he said. EIOPA will be looking to assess defined benefit (DB) and defined contribution (DC) pension schemes together in future stress tests of the European pension fund sector, it has indicated.The outlined move echoes a call from specialists in the Dutch pension fund industry that has also found take-up at the European level via umbrella association PensionsEurope.Publishing the results of the 2019 stress tests yesterday evening, EIOPA said that in future, it wants to “further improve its analytical toolset for stress testing IORPs, extending the horizontal approach and with that assessing the common exposures and vulnerabilities of the DB and DC sectors together”.Niels Kortleve, chair of PensionsEurope’s working group on stress testing, said this year’s results of the DB and DC stress tests were in each case strongly influenced by one country: the Netherlands for the DB analysis and Italy for the DC segment. EIOPA wants to improve its analytical toolkit for stress testing IORPsPensionsEurope also indicated that in its view there were still improvements to be made to the stress test methodology despite a new cash flow analysis approach. The Dutch regulator and pension funds pressed for this.PensionsEurope said it stood ready “to provide its expertise to EIOPA to further define its stress testing methodology in order to address all specificities of the IORPs sector.”EIOPA said the extended cash flow analysis provided important insights, showing that “IORPs’ financial situation would be heavily affected in the short term, leading to substantial strains on sponsoring undertakings within a few years after the shock and resulting in potential long-term effects on the retirement income of members and beneficiaries over decades (should the short-term effects become permanent)”.Financial stability questionsThe DB and DC sectors were for the first time assessed together with regard to investment behaviour and the integration of environmental, social and corporate governance (ESG) factors, which EIOPA said were two important analytical areas complementing the stress test.“The interesting results of that horizontal assessment will be very good starting points for further research in terms of sustainability and understanding the particularities of IORPs’ investment allocation and investment behaviour,” the supervisor said.Assessing potential conjoint investment behaviour by pension funds after the stress test – a sudden reassessment of risk premia and shocks to interest rates on short maturities – EIOPA said it observed “an expected tendency to re-balance to pre-stress investment allocations within 12 months after the shock”.“That may indicate counter-cyclical aspects of the expected investment behaviour, yet would also come at a risk,” it added.According to Janwillem Bouma, chair of PensionsEurope, the results confirmed IORPs’ countercyclical behaviour and important role in stabilising financial markets.“It is important that legislation continues to allow IORPs’ countercyclical behaviour,” he said.Results ‘not surprising’According to EIOPA’s analysis, the materialisation of its adverse market scenario would result in an aggregate shortfall between total assets and total liabilities of €180bn under national frameworks and €216bn under the stress’s common methodology.Under the assumptions of the latter, the shortfalls in the adverse scenario would have triggered aggregate benefit reductions of €173bn and sponsors would have to provide €49bn in financial support.PensionsEurope said the results of this year’s stress test were not surprising. It argued that it was clear funding ratios would drop in EIOPA’s “severe” stress scenario.“If this unlikely severe scenario would happen, it would of course have impact on stakeholders in the form of higher contributions and (possibly) lower benefits,” it continued.According to the industry association, this year’s stress test used the “relatively challenging” reference date of 31 December 2018 – after a sharp fall in some major stock markets that month – and applied a “substantial” shock on assets, especially on equity-related investments, on top of that.The Dutch regulator said that EIOPA’s analysis showed that the materialisation of the adverse stress scenario would have a lasting impact on the Dutch economy.In total, 176 IORPs participated from across 19 countries. French IORPs – mainly new vehicles set up by insurance-based providers – participated for the first time, only a few Irish pension funds took part because of the delayed transposition of the IORP II directive in Ireland, and, as previously reported, there was no participation from the UK, the biggest pension fund market in the European Union.EIOPA said the level of participation meant that in most countries more than 60% of the national DB and 50% of the national DC sectors were covered in terms of assets. Gabriel Bernardino, chair of EIOPA, described the coverage as “quite good”.ESG firstFor the first time, the stress test exercise was complemented by an analysis of environmental, social and corporate governance (ESG) factors for pension funds.EIOPA analysed in a qualitative manner the extent to which pension funds contributed to mitigating ESG risks in society and the extent to which they reduced their own exposure to ESG risks.A quantitative analysis provided a rough indication of pension funds’ exposure to “brown” assets and the overall carbon footprint of their investment portfolios. “It is important that legislation continues to allow IORPs’ countercyclical behaviour”Janwillem Bouma, PensionsEurope“This quantitative part can be viewed as a first step towards a stress test analysis, assessing the impact of transition scenarios towards a low-carbon economy,” the supervisor said.It found that the majority of pension funds in its sample had taken appropriate steps to identify sustainability factors and ESG risks for their investment decisions, but only 30% of them had processes in place to manage ESG risks.The quantitative analysis indicated a relatively high carbon footprint of the sample’s equity investments and, concentrated in a few member states, of the pension funds’ debt investments. The comparisons were with the average EU economy.Bernardino said: “Long-term obligations and long investment horizons arguably require IORPs to consider ESG factors and enable IORPs to sustain short-term volatility and market downturns for longer periods than other financial institutions.“The supervisory monitoring and the applied supervisory tools need to be capable of detecting adverse market trends and market developments that can have long-term negative effects.”Speaking to journalists, he said EIOPA considered pension funds’ stewardship role to be “fundamental”.“You need to engage with the companies in which you invest to make sure they reduce their risk and by doing that you can also reduce your own risk as an investor,” he said.Comprehensive information about EIOPA’s 2019 stress test exercise can be found here.
RelatedPosts Pedro pens three-year Roma deal US billionaire completes takeover of AS Roma Sevilla, Leverkusen cruise into Europa League quarter-finals Aleksandar Kolarov has agreed a contract extension with Roma that ties the defender to the club until the end of the 2020-21 campaign. The experienced Serbia international had been due to become a free agent in June, but now looks set to spend a fourth season at Stadio Olimpico. Kolarov, 34, moved to Roma from Manchester City for €5 million (£4m/$6m) in July 2017, having won two Premier League titles, two League Cup crowns and the FA Cup during his time at the Etihad. He has made 113 appearances for the Giallorossi in all competitions, racking up an impressive 17 goals and further 18 assists throughout that period, while he has also started all 18 matches in Serie A this term. “I want to thank the club for this contract extension, it means a great deal to me,” Kolarov said on Tuesday after the club announced fresh terms had been agreed. “Even now I see it as another starting point. I intend to keep on improving and developing in order to contribute to the growth of this club. “I want to keep improving – physically, technically, my shooting… everything. At my age fitness is key, and I feel good. I’m convinced I can still improve a bit every day. “I’ve worked with a lot of coaches and I’m not just saying this because he’s here now: [Paulo] Fonseca is a coach that can do really well here, and I hope to win something here with him.” “We are delighted to be able to announce this renewal,” club chief executive Guido Fienga added of retaining the services of a no-nonsense veteran. “Aleksandar has always been the consummate professional, both on and off the pitch. With this renewal, we can continue to count on that contribution.” Free-kick specialist Kolarov scored eight league goals last season and has added another five in 2019-20. The left-back played 90 minutes as Roma lost 2-0 at home to Torino on Sunday, the result leaving Fonseca’s side in fourth place.Tags: Alexander KolarovAS RomaRomaStadio Olimpico
FILE – Dejounte Murray #5 of the San Antonio Spurs pushes the ball downcourt against the New York Knicks at AT&T Center on October 23 , 2019 in San Antonio, Texas. Ronald Cortes/Getty Images/AFPSAN ANTONIO— The lessons are coming early for New York Knicks rookie RJ Barrett. From his first NBA game?“You’ve got to keep going, especially if you get up,” he said.ADVERTISEMENT Patrick Beverley fined $25K by NBA for throwing ball into stands MOST READ The Knicks have pinned a great deal of hope on Barrett, the No. 3 overall draft pick out of Duke, after failing to sign any marquee free agents in the offseason.“I told you,” New York coach David Fizdale said. “When the popcorn’s popping, that kid is ready.”Marcus Morris led New York with 26 points, and Julius Randle added 25 points and 11 rebounds.The Spurs are similarly counting on Murray, who played in his first game since tearing his right ACL in a preseason game last October.“I’m blessed, I’m thankful,” Murray said. “I put in the work, but I’ve got a lot of work to do. A year ago today I was at home, I couldn’t walk, and a year later I’m playing. So, I’m thankful.”ADVERTISEMENT DTI creates Marahuyo, a luxe Filipino fashion brand for global buyers Someone from the Philippines could win a $208 million jackpot this week! Murray had 18 points, including a 3-pointer with five minutes remaining that put San Antonio up 105-97. The 6-foot-5 point guard had six assists and eight rebounds.“I thought he was aggressive, tried to do what we wanted to do and played pretty good defense,” Spurs coach Gregg Popovich said. “Probably needs to take care of the ball a little bit better, but overall after being out so long, he’s come a long way pretty quickly.”Murray had four turnovers and San Antonio committed 21 as a team, which led to 32 points for New York. The Spurs did not have any turnovers in the fourth quarter, however.NOTHING SETTLEDNew York started Barrett, Randle, Morris, Bobby Portis and Alonzo Trier, but Fizdale said the lineup could change as soon as Saturday against Washington, especially at point guard.Barrett started at point guard, but veteran Elfrid Payton had nine points and four assists in the second half while running the point with Barrett at off guard.TIP-INSKnicks: Morris, who signed with the Knicks after backing out of a verbal agreement with the Spurs on a two-year deal, was heavily booed throughout the game. Morris responded to the initial boos by backing down and then hitting a turnaround jumper on DeMar DeRozan for the game’s opening points. … The Knicks signed F Ivan Rabb to a two-way contract. The 6-foot-10, 220-pounder averaged 5.7 points, 4.3 rebounds and 1.0 assists in 14.6 minutes over two seasons with the Memphis Grizzlies. He will primarily play for New York’s G League affiliate, the Westchester Knicks.Spurs: Trey Lyles, who the Spurs signed after Morris reneged, started at center and had eight points and 11 rebounds. … Popovich opened his 24th season as San Antonio’s coach, setting the record for most seasons coaching one franchise. Popovich was previously tied with Utah’s Jerry Sloan. … Popovich acknowledged the Spurs fully guaranteed the final year of Aldridge’s contract. Aldridge was guaranteed $7 million for 2021 before the Spurs picked up their option Wednesday to fully guarantee his $24 million contract. … Popovich, Larry Brown, Hubie Brown and Bill Bertka are the only coaches to serve as an NBA head coach in their 70s in league history. Popovich turned 70 on Jan. 28.UP NEXT Knicks: Host Washington on Saturday night.Spurs: At Brooklyn on Friday night.Sports Related Videospowered by AdSparcRead Next LATEST STORIES This jewelry designer is also an architect View comments Matteo Guidicelli had saved up for Sarah G’s ring since 2014? It’s a concept Spurs point guard Dejounte Murray knows well.LaMarcus Aldridge had 22 points, Bryn Forbes added 20 and San Antonio rallied for a 120-111 victory over the Knicks on Wednesday night, spoiling Barrett’s debut.FEATURED STORIESSPORTSGreatest ever?SPORTSFormer PBA import Anthony Grundy passes away at 40SPORTSSan Miguel suspends Santos, Nabong, Tubid indefinitely after ‘tussle’ in practiceThe Spurs outscored the Knicks 37-27 in the final quarter after Barrett rallied New York from a 16-point deficit in the first half. Barrett scored 21 points on 9-for-13 shooting with five rebounds and two assists in 37 minutes.“You’ve got to keep putting it on them,” Barrett said. “Just like we’re not going to quit, they’re not going to quit either.” Becoming his own man Canadian vaping study details danger from ‘popcorn lung’ chemical Duterte calls himself, Go, Cayetano ‘the brightest stars’ in PH politics Don’t miss out on the latest news and information. Sports venues to be ready in time for SEA Games PLAY LIST 00:59Sports venues to be ready in time for SEA Games01:27Filipino athletes get grand send-off ahead of SEA Games00:50Trending Articles02:11Makabayan bloc defends protesting workers, tells Año to ‘shut up’03:07PH billiards team upbeat about gold medal chances in SEA Games01:38‘Bato’ to be ‘most effective’ CHR head? 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